World View & Market Commentary. Forest first; Trees second. Focused on Real & Knowable facts that filter through the "experts" fluff and media hyperbole. Where we've been, what the future may hold and developing a better way forward.

Sunday, January 4, 2009

SAN FRANCISCO (Reuters) - Federal Reserve Bank of St Louis President James Bullard said on Saturday that an explicit inflation target would help policy-makers prevent either deflation or inflation from taking hold in the United States.

"An inflation target would help focus expectations," he told a panel discussion during the annual meeting of the American Economic Association.

Bullard said that with Fed interest rates nearly at zero, an inflation target would also help send signals to the private sector that would normally be communicated by changes in official borrowing costs.

"Maybe now would be a particularly good time to do that because you have this possibility of expectations drifting off to deflation or a lot of inflation. ... I think it would help," said Bullard, who is not a voting member of the Fed's interest rate-setting committee this year.

Jan. 4 (Bloomberg) -- The U.S. economy faces a “serious risk” of stagnating for an extended period of time and “it’s worth pulling out all the stops” on fiscal stimulus, said Federal Reserve Bank of San Francisco President Janet Yellen.

“The current downturn is likely to be far longer and deeper than the ‘garden-variety’ recession,” Yellen said in the text of a speech today in San Francisco. “If ever, in my professional career, there was a time for active, discretionary fiscal stimulus, it is now.”

So, now we have two other members of the fed who do not understand history, economics, or math.

Okay, I know it’s not exactly conventional to combine music with economics, but hey, I like it and if you don’t – well, don’t click the play button!

Sorry, St. Louis, there are no “inspiring” songs that I could find that would be fun to twist and weave into my anti-fed theme. While I didn’t find anything cool for St. Louis, I did find a guitar and vocal I like for San Francisco – enjoy:

And, if Bullard ever wants to visit the Fed’s Janet Yellen in San Francisco… be sure to wear some flowers in your hair!